Understanding International Relations, Third Edition

From neorealism to neoliberalism
From the perspective of the late 1970s it might have been anticipated that
the way International Theory would develop in the remaining decades of
the twentieth century would be along the lines of a contrast between
(neo)realism and pluralism, with, perhaps, a left-wing critique of both
theories hovering in the background. To some extent this has happened, and
a number of accounts of contemporary International Relations theory are
presented in terms of three perspectives or ‘paradigms’ (Little and Smith
1991; Viotti and Kauppi 1999). However, in the United States, which is the
effective home of the discipline, theory developed in a rather different way.
The pluralists of the 1970s mostly became the ‘neoliberal institutionalists’
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of the 1980s and 1990s, and in the process came rather closer to neorealism
than might have been expected.
Scholars such as Robert Keohane and Robert Axelrod developed models
which shared a lot with neorealism (Keohane 1984, 1989; Axelrod 1984;
Axelrod and Keohane 1985). They accepted the two basic assumptions of
international anarchy and the rational egoism of states; the aim of their
analysis was to show that it was possible for rational egoists to cooperate
even in an anarchical system. Drawing material from the same kind of
sources as the neorealists – in particular game theory, public choice and
rational choice theory – they recognized that cooperation under anarchy
was always liable to be fragile. ‘Free rider’ states – which took the gains of
cooperation without contributing to the costs – would always be a problem,
and the ‘prisoner’s dilemma’ game modelled very clearly the difficulty of
relying on promises of cooperation made in circumstances where enforcement
was impossible. However, if international regimes could be established
within which information could be exchanged and commitments formal-
ized, the possibilities for cooperation would be enhanced. Establishing
regimes is a difficult process, and most of the existing regimes in, especially,
the international political economy were established by a ‘hegemonic’
power, the United States, in the immediate post-war era – a ‘hegemon’ in
this context being defined as a state that has the ability to establish rules of
action and enforce them, and the willingness to act upon this ability. One of
the key propositions of most of these writers is that US hegemony has
declined dramatically in recent years, thus posing a problem – is it possible
for cooperation to continue ‘after hegemony’? The answer usually given is
‘yes’ – but at sub-optimal levels, because what is happening is that the
regime is living on the capital built up under hegemony; the details of this
argument will be examined in Chapter 7 below.
The neoliberals are clearly saying something rather different about inter-
national cooperation from the neorealists, but a common commitment to
rational choice theory makes them part of the same broad movement. The
neorealist Joseph Grieco, in an article ‘Anarchy and the Limits of
Cooperation’, helpfully sets out the points of disagreement between the two
camps (Grieco 1988).
Grieco suggests that a key issue concerns absolute as opposed to relative
gains from cooperation. Neoliberals assume that states are essentially con-
cerned with the absolute gains made from cooperation; as long as they are
happy with their own situation, they will not be too worried about how
well other states are doing. There is a clear parallel here with liberal trade
theory, where the fact that parties will gain unequally from trade that
reflects comparative advantage is deemed less important than the fact
that they will all gain something. Neorealists, on the other hand, assume
that each state will be concerned with relative gains from cooperation, that
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is with how well other states are doing as well as how well it is doing. This
follows from the neorealist focus on the balance of power, which rests
precisely upon the assumption that states will continually scan each other
for signs that their relative power position is changing. This difference in
orientation, Grieco suggests, means that neorealists and neoliberals focus
on quite different problems when it comes to the limits of cooperation. For
neoliberals, it is not at all difficult to see why states cooperate – it is in their
(absolute) interest to do so. The problem, rather, as we have seen, is that
states have a tendency to cheat, to become ‘free riders’, and what is needed
is some mechanism that prevents cheating. This would allow states to
realize their true long-term interest in cooperation as opposed to falling
prey to the temptation to settle for short-term gains – it is easy to see why
this branch of theory is termed neoliberal. For neorealists on the other
hand, ‘cheating’ is something of a non-problem. From their point of view,
the difficulty is getting cooperation going in the first place, because states
will only cooperate when they expect that the gains they will receive will be
greater than, or at least equal to, the gains of all other relevant parties –
quite a tough criterion to meet.
Grieco argues that the neorealist assumption that states concentrate on
relative gains is backed up by observations of how states actually behave in
the international system, and also by public opinion data which he shows
suggests that the US public at least is more concerned with relative gains
than with absolute gains. On the other hand, neoliberals can point to the
extensive network of international institutions which exists and, indeed, is
continually added to, which rather undermines the proposition that states
are chronically unwilling to cooperate. From the neorealist perspective, the
neoliberals are engaging in a doomed enterprise. While accepting an essen-
tially Hobbesian definition of the situation – that is, the two criteria of
anarchy and rational egoism – neoliberals argue that cooperation can take
place without the presence of a Hobbesian ‘sovereign’; this cannot be.
Neoliberals argue that although cooperation will be sub-optimal it will
still be possible.
However this debate is resolved, what is clear is that neoliberals and
neorealists are much closer together than their non-neo forebears. Whereas
the latter understood the world in fundamentally incompatible terms,
stressing either harmony or disharmony of interests, and the importance or
unimportance of domestic structures, the ‘neos’ both rest their position on
what are taken to be the facts of anarchy and of the rational egoism of
states. It may be going too far to write of a unified ‘neo–neo’ position
(Waever 1996), but certainly the two positions are close enough to be seen
as offering different understandings of what is essentially the same (rational
choice) research programme. Moreover, this is a research programme
within which the work of the majority of IR scholars can be located. As will
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be apparent in subsequent chapters, within this research programme there
is room for a great deal of variation, and even basic notions such as the
balance of power can be challenged – perhaps states ‘bandwagon’ rather
than ‘balance’? Nonetheless, implicitly or explicitly, the ‘anarchy problem-
atic’ established by Waltz, sets the agenda for most contemporary IR
research. But, especially in the last few years, opposition movements are
growing, and the rest of this chapter provides an overview of these
movements, although perhaps the most fundamental challenge over matters
of substance, that of theorists of globalization, is covered in its own terms
in Chapter 9.